Bought deal CALGARY, Feb. 19, 2013 /CNW/ - Sterling Resources Ltd. (TSX-V: SLG) ("Sterling" or the "Company") announces that it has entered into an agreement to sell an aggregate
of 73,333,333 Common Shares of Sterling ("Common Shares") to a
syndicate of underwriters led by Casimir Capital Ltd. (the
"Underwriters") on a bought deal basis at a price of $0.75 per share
for gross proceeds of $55 million (the "Offering"). Under the terms of
the Offering, 20,000,000 Common Shares will be offered by way of a
short form prospectus in all of the Provinces of Canada (excluding
Quebec) and in certain jurisdictions outside of Canada, including the
United States, on a private placement basis. The remaining 53,333,334
Common Shares will be distributed on a private placement basis pursuant
to applicable exemptions from prospectus requirements.
Sterling has granted to the Underwriters an over-allotment option (the
"Over-allotment Option") to acquire up to an additional 3,000,000
Common Shares at any time and from time to time on, or for a period of
30 days following the closing of the prospectus portion of the
Offering, at a price of $0.75 per share, solely to cover their
over-allocation position, if any. In connection with the private
placement portion of the Offering, Sterling has granted to the
Underwriters an option (the "Underwriters' Option") to acquire up to an
additional 8,000,000 Common Shares exercisable not less than two
business days before the closing of the private placement portion of
the Offering, at a price of $0.75 per share. If the Over-allotment
Option and Underwriters' Option are both exercised in full, the
aggregate gross proceeds of the Offering would be $63.25 million.
The Offering is subject to customary conditions and the receipt of
required regulatory approvals, including the approval of the TSX
Venture Exchange (the "TSX-V") and is scheduled to close on or about
March 11, 2013, or such other date as the Company and the Underwriters
may agree.
Sterling will use the net proceeds of the Offering of approximately
$51.4 million (prior to any exercise of the Over-Allotment Option or
the Underwriters' Option) for Breagh Phase 1 development costs and
costs relating to the Breagh senior secured loan facility, repayment of
the US$12 million loan entered into on December 31, 2012 with an
affiliate of The Vitol Group ("Vitol"), certain exploration, appraisal
and pre-development expenditures and other corporate purposes. With the
proceeds of the Offering the Company is funded through June 2013.
"On February 6, 2013 we announced an update on both our near and longer
term capital requirements, and we are very pleased with the Offering
which has addressed our near term capital needs," stated Walter DeBoni,
Chair of the Sterling Board, adding "Equally important, the Offering
will provide us with the appropriate time to undertake a thorough and
systematic review of all of our strategic alternatives as announced on
February 12, 2013 in response to the unsolicited offer from Vitol."
In an effort to unlock the value of its underlying assets, the Company
has been working with RBC Capital Markets to review a full range of
options, including:
A corporate sale, merger or other business combination, which may
include discussions with Vitol
Joint venture or farm down transaction to accelerate activities in the
North Sea and Romania
Selling specific assets of the Company
Addressing long term capital requirements via a high yield bond and
other forms of financing
"The Board is committed to acting in the best interest of shareholders
to maximize value," said Mr. DeBoni, adding "We have believed for some
time that our stock price does not reflect the underlying value of our
assets. The significant capital required to develop these assets can be
accessed through the capital markets or via partnerships and business
combinations and we will seek the alternative that delivers the most
value for our shareholders